Lithium is increasingly hailed as a wonder metal. That alone may prompt commodity investors to run a mile. In the past decade alone, they have witnessed the rise and fall of rare earths and the short-lived nuclear-power renaissance that briefly made uranium an unlikely darling of the market.
They should cast their minds back a bit further, though, to the late 1990s and another metal: palladium.
Lithium is at the heart of the battery powering that portable device you can’t seem to stop looking at. The bigger opportunity concerns batteries for electric and hybrid vehicles and power storage for homes, businesses and utilities, which require many pounds of the metal rather than fractions of an ounce. In a report published in December, Goldman Sachs posed this question:
What if I told you…Lithium is the new gasoline [?]
To which your response might be something along the lines of: wait, weren’t you the same guys telling me uranium was going back up in 2008? Yet, while both lithium and uranium are touted by their fans as critical in the fight to cut carbon dioxide emissions, lithium has the distinct advantage of rarely being mentioned in the same sentence alongside words such as “tsunami” or “fallout.”
The point is that if electric and hybrid vehicles with batteries keep taking market share away from internal combustion engines, the opportunity could be immense. In a recent report, Citigroup estimated that if sales of battery electric vehicles increased from an estimated 150,000 last year to 1 million by 2020 — likely only about 1 percent of global vehicle sales overall — lithium demand from that sector alone would rise by about 66,000 tonnes of lithium carbonate equivalent.
Currently, demand for lithium across all its uses, ranging from iPhone batteries to industrial grease, is only about 160,000 tonnes.So the big question is whether demand for electric vehicles can continue to grow at a rapid pace.
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